NEW YORK (CNNMoney) — Spain has come under heavy pressure in the bond market this week as investors grow increasingly convinced that the government will need a bailout.

At current levels, the price Spain must pay to borrow money for 10 years now looks to be comfortably above 7%, a cost that experts say the government cannot afford to pay for long.

The yield on Spain’s 10- year bond rose to a high of 7.75% on Wednesday, before falling back to 7.37% later in the day.

“The pressures are clearly building for a major policy response, as Spain finds the cost of funding reaching intolerable levels,” said Andrew Milligan, head of global strategy at Standard Life Investments in Edinburgh.

The surge in yields, which rise when prices fall, reflects a growing conviction among investors that Spain will become the latest, and largest, euro area nation to seek a bailout from the European Union and International Monetary Fund.

Spain has been in the line of fire since it requested up to €100 billion in loans from the eurozone rescue fund to recapitalize the nation’s banks. Eurozone finance ministers approved the terms of the loan agreementlast week, but the move failed to allay concerns about Spain needing a full-blown bailout similar to those given to Greece, Portugal and Ireland.

Spanish Prime Minister Mariano Rajoy has resisted taking such a dramatic step, which would entail a significant loss of national sovereignty and a lasting stigma.

Even if Madrid capitulated, analysts say the eurozone may not have enough money to fund a bailout for Spain.

The bulk of Europe’s crisis resources will be in the European Stability Mechanism, which is on hold until Sept. 15, when the German Constitutional Court is expected to issue an initial opinion on its legality.

What’s more, analysts say the ESM will not be able to inject funds directly into Spanish banks until a eurozone-wide banking regulator is established, which could take months, if not years. That means the loans could end up adding to the debts of the Spanish government, which is already struggling to shrink its deficits.

In the meantime, eurozone finance ministers have agreed to set aside €30 billion in emergency funds for Spain from the European Financial Stability Facility.

By contrast, Spain could need up to €300 billion to cover its financing needs through 2015, according to London-based research firm Capital Economics.

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